Capitalism: What Were Its Moral Strengths and Weaknesses? Part 1

William Kristol, neoconservative leader and Weekly Standard editor, believes that the time has come to rethink capitalism. “It will be important, over the next four years,” he writes in the November 24 edition of his journal, “to fight to save free-market capitalism from the Barack Obama administration. It will be almost as importantand more interestingto figure out how to how to save capitalism from its worst aspects and most damaging tendencies.”

We expect Kristol to oppose the Obama administration. We do not expect him to call for an exploration of capitalism’s inherent weaknesses!

Capitalism prefers private methods of production and distribution. It favors free and informed exchanges in largely unregulated markets that act in harmony with the laws of supply and demand. It opposes “systems” of public ownership, centralized planning, and coordinated economic endeavors. Its mantra is “competition,” not “collaboration.”

From a Christian ethical point of view, capitalism has much going for it. Rather than depending upon widespread conversions from egoism to altruism, it takes people as they are and on this unpromising basis it fosters a way of life that works.

Capitalism is productive and efficient beyond compare. It rightly rewards those who take risks or develop needed skills, services, and products. It is dynamic and diverse, forever coming up with new things and experiences. It is almost color blind, the only hue that it ultimately cares about being the tint of currencies and coins. It champions liberty and it knows that without enough money to share one’s views freedom of thought and speech are truncated rights.

From a Christian perspective, capitalism is also ethically troubling. It not only recognizes greed, it baptizes and catechizes it, too. Gordon Gekko in Oliver Stone’s 1987 movie, Wall Street, said it best: “Greed is good!”

In capitalism, entrepreneurs pay producers as little as possible and charge consumers as much as they can. Over time, the rich get richer and the poor get poorer. Eventually, neither can afford to buy or sell and the economy “crashes and burns.”

From a capitalist point of view, this is a good thing. Like forest fires that consume the dead and weak, recessions and depressions eliminate sick businesses that should have disappeared much earlier. But these economic downturns also burn people.

Another big problem is that capitalism depends upon a constantly growing economy, which requires an accelerating and unsustainable consumption of the world’s natural resources: oil, minerals, water, plants and animals, water. Many say that this is capitalism’s greatest ethical challenge. I agree.

The kind of capitalism we have known for the last several decades is a thing of the past. Like many other nations all over the world, the United States is now investing hundreds of billions of dollars in loans and other arrangements to rescue failing businesses. This is only the beginning. Hundreds of billions of more dollars will yet be spent. Our much-vaunted global economy is crashing and burning and millions of people are getting burned.

My view is that the greatest single cause of our current economic difficulties is neither bad loans (foolish Democrats!) nor deregulation (foolish Republicans!). It isn’t even their devastating convergence in an almost perfect economic storm. It is our frequent inability, as evidenced by the many papers and books on the subject, to solve the so-called “Adam Smith” problem.

This difficulty is that the eighteenth-century Scottish “father” of modern capitalism seems to say different things. On the one hand, he maintains that self-interest is the engine of the economy that, “as though led by an invisible hand,” unintentionally benefits everyone. On the other hand, he has much to say about human sympathy. Perhaps more akin to what we call empathy, this is the almost irremovable tendency of normal people to identify with the feelings of others.

Here are two of the most frequently quoted paragraphs, the first from the Theory of Moral Sentiments, which was first published in 1759, and the second from the Wealth of Nations, which appeared in 1776:

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it. Of this kind is pity or compassion, the emotion which we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrow of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous and humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.

Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses [sic] to depend chiefly upon the benevolence of his fellow-citizens. Even a beggar does not depend upon it entirely.

So there we have it: sympathy and self-interest. I believe that our frequent failure to integrate them in thought and life is the fountain from which all our current economic difficulties flow. Nothing else matters as much.

Christianity has something to say about this and this is more profound and helpful than “We should be unselfish.” We will explore these matters in our next column.

David Larson teaches in the School of Religion at Loma Linda University.